The return of former Athenahealth CEO, Jonathan Bush
Almost three years ago exactly, Jonathan Bush was forced out as CEO of Athenahealth—a company that offered software to hospitals and doctors that he co-founded—amid a brutal activist campaign from Elliott Management.
It was far from a simple story. The then CEO of the then-public company faced troubling allegations of inappropriate behavior, including accusations that he had been in physical altercations with his ex-wife (Bush said at the time that he took “complete responsibility for all these regrettable incidents involving [his] former wife”). In a later interview, Bush told CNBC he suspected the hedge fund titan had a hand in resurfacing those skeletons—which would’ve been of little surprise given the hedge fund’s playbook at the time—in its bid to push him out of the company and do what they believed would boost the stock price. But Bush had no evidence and Elliott meanwhile denied those claims.
Fast forward to today, and the former CEO of the company that private equity firms Veritas Capital and Elliott Management-affiliate Evergreen Coast took private in a $5.5 billion deal in 2018, is back with his next company.
Zus Health, a maker of software for healthcare providers to build apps and share patient data, announced that it had raised $34 million in Series A funding led the round by Andreessen Horowitz. Other investors in the round included F-Prime Capital, Maverick Ventures, Rock Health, Martin Ventures and Oxeon Investments.
Pronounced like Zeus, the head of the Greek pantheon and “the father of Athena,” the company’s name may seem like a cheeky nod back to his previous venture that he was ousted from (Zeus, afterall, the king of the gods in the myths, ruling over even the goddess of wisdom), but Bush is surprisingly lacking in bitterness when asked about Elliott.
“Blame not the wolf for eating the lamb. I have no hard feelings,” he told Term Sheet early Thursday. If anything, the newly re-minted CEO of a venture-backed startup is seeing the upside of being in such a dramatic board battle years later. “If it wasn’t for Elliott, probably no one would cover this. It is the silver lining.”
While Zus has a similar mission in many ways to Athenahealth, cutting down on back-office work like documentation for doctors, Bush says the area in which the company is most focused on, creating unified health records, is a project that never took off within his old company, and one that that public market investors (Elliott in particular) pushed him to get out of as they sought more sure-fire bets on boosting returns on the company’s stock. The incumbent healthcare clients that Athena worked with meanwhile had little interest in sharing the patient records because it created a wall around their customer bases, he said. Zus meanwhile is looking for customers among digital health startups that can then build apps—like for patient management—on top of the company’s platform. In that sense, Bush says he sees the company akin to a Plaid—eventually even pulling in data from say FitBits.
Of course, the question still is if patients will share their data on a large scale—and as history has shown, that won’t be easy.
I also asked if he had plans to return to public markets. A cousin to former President George W. Bush, he is far from the traditional public company CEO, with stories such as those of corporate drinking games becoming the basis for questions about his leadership style, and eventual ouster by outside investors. As a Series A company, it is premature to even contemplate an IPO seriously, Bush acknowledges. But if the company does one day go public, he says, “I don’t need to be the CEO of a public company.” And there is also another route to take, too, with the popularity of supermajority votes among startup founders.
One way of solving the problem of activist investors, he notes, “is to give capital appreciation access” while maintaining control as Facebook’s Mark Zuckerberg has done.
OATLY AND PROFITS: The markets are all about growth recently. I spoke with Oatly CEO Toni Petersson and Chairman Eric Melloul about when the company might hit profitability. The answer? Might not be for a few years. Read more here.
AND ONE MORE! In a newsletter two issues back, I wrote about how few social media unicorns there have been since Snap crossed the mark in 2014, noting Clubhouse and Nextdoor being the exceptions, per Pitchbook data. But a reader pointed out that there was also Reddit which became a unicorn in 2017, and others on Twitter pointed to Discord, which became a unicorn in 2018. Semil Shah over at Haystack also points to Cameo and Outschool—which especially in the latter case, points to the heart of the difficulties with categorizing companies as social media. It is now a must-have feature of many a business model including in gaming and the education space.
HOUSEKEEPING: There will be no newsletter tomorrow in observance of Juneteenth. I’ll be back Monday.
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